|Subject:||[socialcredit] 10 can't pay 11 fallacy, continued|
|Date:||Thursday, July 12, 2007 09:44:00 (-0700)|
|From:||william_b_ryan <william_b_ryan @.....com>
"Therefore, I suggest: a) Two boxes one for the
principal the other for interest: b) The interest can
be reused but only paid in full only at the end. c)
The principal paid cannot be re-used."
Naturally on these restrictions 10 cannot pay 11. When
10 in principal is repaid there is a remaining
1 owed that cannot be paid inasmuch as there is no
money in existence. It must be borrowed thereby
compounding the debt. That is how this fallacy goes.
But it doesn't begin to describe the real world
condition. In the real world banks are members of
their communities, spending for goods and services
needed to perform their services and conduct their
operations, as does every firm in their communities.
The economy is a great cooperative commonwealth in
continuous rotation. So, during the period that 1 in
interest accrues, banks are spending, which increases
the money in circulation available to pay both
principal plus interest back to the banks.
If banks create the money that they loan, they are
certainly capable of creating the money that they
spend during the period that 10 is lent and 11 becomes
due, before they have received the first payment in
this tortured example. During this period their
spending is charged against their accrued income
It's all done according to the rules of double entry
accounting consistent with the concept of profit and loss.
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